The Ethical Executive: The Vatican's strategic plan for the business community

The Ethical Executive: The Vatican's strategic plan for the business community

When a business leader confronts Catholic social principles, there is often a dual response that was best captured by Andre Delbecq, former dean of Santa Clara University’s business school: “We seem to have a sense of what we yearn for, but behavioral specificity is thin.” Catholic social teaching’s principles of human dignity, the common good, solidarity and subsidiarity inspire a deep sense that there is something more to business than merely maximizing wealth for owners. But once this inspiration moves to practice, specifics are hard to locate, and yearning turns into vague sentiment.

As important and as rich as the Catholic social tradition is, its principles have not been effectively communicated to the business community. For many business people, the social principles of the church are perceived as well intentioned but too abstract to have any impact. These principles do not seem to land anywhere, but rather float in the stratosphere of theory. As one chief executive officer said to me not long ago, “I wouldn’t know the common good if it bit me.” For the most part, business people have received little help from the church or the academy in their desire to move from principle to practice.

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This gap is not an easy one to bridge, but a recently released document by the Vatican’s Pontifical Council for Justice and Peace is a move in the right direction. On March 30, 2012, Cardinal Peter Turkson, president of the council, presented a document titled “Vocation of the Business Leader” to 2,000 business leaders at the International Christian Union of Business Executives World Congress in Lyon, France. The document, which I coordinated and helped draft along with colleagues from around the world, signals a watershed moment. The church, drawing from its rich social tradition, all but declared that “God loves businesses” and offered concrete ways to bridge principle and practice. (The complete document is available at www.bit.ly/businessleadervocation.)

Business Plan

“Vocation of the Business Leader” takes to heart Pope Benedict XVI’s call in “Caritas in Veritate” (2009) to “a profoundly new way of understanding the business enterprise.” Writing in the context of the financial crisis, he explains that the economic world is in need of rediscovering deeply moral and spiritual principles, which will orient it toward better, more effective, more humane business practices. Like all institutions, whether church, government or education, business is in need of renewal and reform. It needs to rethink its purpose, its telos, if it is to be contributor to the common good rather than a drain on it.

Catholic social principles help articulate this new understanding. In light of the ongoing financial and cultural crises in which we find ourselves, the need is clear and the opportunity could not be better to bring this set of principles into focus. At the heart of the document is the conviction that business executives are called not just to do business, but to be a particular kind of leader in business. The actions of business people are significant because they engrave a specific character on their work communities, one that takes them and others somewhere. Ten years ago, John Kavanaugh, S.J., wrote in this magazine that “our choices are the prime indicators of our destiny.” Human work, and in particular the work of business leaders, is not a second-rate vocation, but, as “Vocation” states, it is “a genuine human and Christian calling” from God. The document sees business not simply in terms of a legal minimalism—“don’t cheat, lie or deceive”—but rather as a vocation that makes “an irreplaceable contribution to the material and even the spiritual well-being of humankind.” There is nothing second-rate about this.

But this vocation is not without difficult challenges, especially in the modern world. Chief among these difficulties is a divided life, or what the Second Vatican Council’s “Pastoral Constitution on the Church in the Modern World” calls a “split between the faith which many profess and their daily lives” (No. 43). The council saw this split as “one of the more serious errors of our age.” Religion and family are too often viewed less as components of a social institution than as a private enclave where individuals live out their own private preferences. Business is viewed as a mechanical operation of inputs and outputs that need to be engineered for maximum efficiency. This divided life mutes the social demands of faith and conceals rather than reveals “the authentic face of God and religion” (No. 19).

To show the implications of this vocation, “Vocation of the Business Leader” is organized according to a structure common in the Catholic social tradition: “See, judge and act.” Anyone in business “sees” the increasing complexity of doing business. “Vocation of the Business Leader” does not shy away from the serious and complicated trends within business and the moral and spiritual issues they present. While it recognizes a wide variety of challenges and opportunities, it focuses on four: globalization, communication technology, financialization and cultural changes. These trends or signs, the document explains, are “a complicated mix of factors” that present “a complex interplay of light and dark, of good and evil, of truth and falsehood, of opportunities and threats.”

The document describes, for example, the increasing phenomenon of “financialization,” a fancy academic term for the shift in a capitalist economy from production to finance as the determinant for economic development. In a well-ordered market economy, finance is at the disposal of production, development and wealth creation, allowing productive investments and improvement of human resources. By contrast, “financialization” switches this relationship, and production comes to be at the disposal of finance.

Ask any business person today, and most will tell you that business worldwide has intensified tendencies to commodify relationships and reduce them to one value—price—the price of a product, the compensation of labor and the monetary value of the company. The mantra in business and increasingly in other areas of life is “if it can’t be measured it does not exist.” And the one clear measurement in business is financial. Without a strong sense of vocation, financialization becomes the default mechanism that moves business from relationships of virtue to the thin thread of price.

Practical Principles

At the center of the document is a rearticulation of the church’s social principles for business leaders to “judge” and discern what is good and not so good in business. The document lays out six practical principles in relationship to three essential objectives of business. These six principles attempt to help business people to see things whole and not just as parts. Business leaders are tempted to fixate on one principle or area of business over another. A common fixation is on wealth creation and stewardship at the expense of wealth distribution and justice, a focus on shareholders at the expense of the dignity of employees. Wise and just business leaders avoid such dichotomies and seek deeper levels of integration.

The document resists the temptation to draw up a detailed list of policy recommendations and instead provides a framework of action that reflects the rhythm of the contemplative and active life. In “Caritas in Veritate,” Pope Benedict captures this rhythm when he defines charity as “love received and given.” The document explains that the first and for some the most difficult “act” is “to receive what God has done for him or her.” A principal challenge for business people is that their “can do” and practical orientation can tempt them to regard “themselves as determining and creating their own principles, not as receiving them.” What is desperately needed for business people is first to receive, and in particular: “to receive the sacraments, to accept the Scriptures, to honour the Sabbath, to pray, to participate in silence and in other disciplines of the spiritual life. These are not optional actions for a Christian, not mere private acts separated and disconnected from business.” This can be a powerful shift from the overcharged activism one finds in business. Without a deep well of reflection, contemplation and prayer, it is hard to see how business people, or any other professionals, can resist the negative dimensions that come from financialization, technological overload, hyper-competitive situations and the like.

The second act to which the church calls the business leader is to give in a way that responds to what has been received. This giving is never merely the legal minimum; it must be an authentic entry into communion with others to make the world a better place. In particular, the giving of business leaders entails cultivating practices and policies that foster integral human development. These include fair pricing, just compensation, humane job design, responsible environmental practices, social and socially responsible investment. Such cultivation would also address a host of other organizational practices such as hiring, firing, layoffs, marketing and advertising, receivables and payables, board governance, employee training, leadership development, supplier relations and more.

Return on Investment

“Vocation” asks much from contemporary business people; it also foresees new challenges for Catholic educators. The document asks Catholic universities and especially their business schools to foster a mission-driven approach to curriculum and research. While Catholic business schools have made helpful contributions in the areas of business ethics and corporate social responsibility, they have not engaged the Catholic social tradition in relation to business thoroughly enough. Instead, they have largely drawn upon ethical traditions like utilitarianism, Kantianism and other secular systems to understand the role of ethics in business.

In “Caritas in Veritate,” Benedict observes that business ethics severed from a theological anthropology “risks becoming subservient to existing economic and financial systems rather than correcting their dysfunctional aspects” (No. 45). It is important for Catholic universities to reconsider their own tradition and discuss it in the context of other approaches; otherwise, the tradition will fail both to develop in a robust manner and to contribute to the wider culture.

The Catholic social tradition brings forth a rich interplay of teachings, thought and practice to the area of business and penetrates deeply into the significance of human action. “Vocation of the Business Leader” is a timely response that articulates a coherent set of social principles governing business practice that arise from the Catholic social tradition. The Pontifical Council asks business people to reflect on their vocation, guided by church teaching, with the hope of more fruitful dialogue to come and a meaningful spiritual and practical return on investment from these Catholic business principles.

What Businesses Should Do

Meet the needs of the world. Businesses produce goods which are truly good and services which truly serve; that contributes to the common good. They maintain solidarity with the poor by being alert for opportunities to serve otherwise deprived and underserved populations and people in need.

Organize good and productive work. Businesses make a contribution to the community by fostering the special dignity of human work. They provide, through subsidiarity, opportunities for employees to exercise appropriate authority as they contribute to the mission of the organization.

Create sustainable wealth and distribute it justly. Businesses model stewardship of resources—whether capital, human or environmental—they have re-ceived. They are just in the allocation of resources to all stakeholders: employees, customers, investors, suppliers and the community.

Genesis of a Teaching Document

The publication of “Vocation of the Business Leader” is a sign of the leadership of Cardinal Peter Turkson and Bishop Mario Toso at the Pontifical Council for Justice and Peace, who are seeking a broad collaboration of academics and practitioners in order to better evangelize the social world. The genesis was a seminar organized and sponsored by the council entitled “The Logic of Gift and the Meaning of Business” (visit bit.ly/businessvocation). The council brought together business leaders and academics from various disciplines, like economics, theology, philosophy, management, business ethics and engineering, to grapple with Pope Benedict XVI’s insights in “Caritas in Veritate.” One fruit of this exploration is “Vocation of the Business Leader.”

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ALICE MARX

6 years ago

This is a key initial article in a major issue of our time. True, it is complex. A starting point would be for Catholic executives to embrace the dignity that work provides for each individual and support that dignity by paying a wage that will provide to them a basic Economic Security (more than a Living Wage). We speak of wage competitiveness in the market place but there is a wage below wihich it is not a Competitive or Retention issue for a business but an issue of Human Dignity.

I have calculated that wage to be approximately $30,000 for an Individual (not a family) in this area of New York. This was a surprise to me since I had never a need of working out an annual, personal budget.

Your article, Michael, is an initial article that should be read by all Catholic business persons. I would especially challenge those business people who donate their time to Catholic Charities organizations to start with this article when considering the wages of human services workers.

EUGENE HAYES MR

6 years ago

Michael has done all business leaders a great favor by bringing to light what I hope is a shift in the direction of discussion about business morality. Such issues as wages and salaries, working conditions and worker safety, profit and the common good need to be focused on with increasing frequency and public comment. Just the opposite is rampant today when sensationalism and catch phrases tend to replace honest disagreement and discourse.

Paul Marx's comment is a good place to start, perhaps. However, I think wages and salaries requires that we put the discussion of profit ahead of it. How much is "enough" of a wage or salary? Since wages and salaries come from profit how much profit is enough? If it enables one to make more than $100,000 a year it just may be too much and would be better used to raise the wages and salaries of those making less than half of that!

According to the U.S. Census Bureau in a report focusing on 2010 income distribtion in the U.S. just less than 20% of the 211.492 million individuals age 15 and over received an annual income of less than $10,000. Slightly more than 28% of the total group received between $10,000 and $24,999 that year. Those numbers say that about 45% of the working people in the U.S. earned less than the declared poverty income level of $24,000 in 2010. I suggest that that most people would emphatically state that that amount is NOT "enough" to live on.

Would an income of $50,000 be "enough"? 27% more of the population make that kind of income. But, a total of 70% of the entire working population made $50,000 OR LESS. Is $50,000 enough?

Nearly 13% made between $50,000 and $75,000. Only slightly more than 5% made between $75,000 and $100,000. Another almost 7% had income of more than $100,000. Put together, 25% of the total population made $50,000 or more.

Admittedly, the size of the family unit has a big influence on what is "enough" for many families. I realize that determining how much is "enough" is a difficult matter. May I suggest that objectives be identified and set for lifting more people up above $50,000 in income? And that a serious, public, widespread discussion center on that question and its relative how much profit is "enough"?

Wilson Martin

4 years ago

Really I am very happy to read this blog. It is very rare that we can found some blog related to our society and social service. In my point of view it is a good job. All can't do this. For this a person have to posses own interest and skill. Such executives are really unique and effective. The job responsible of an executive is really high and related to achieve the organizational goal. Executive Coaching Florida

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This article also appeared in print, under the headline "The Ethical Executive," in the May 21, 2012 issue.

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